Category: Business Strategy

My New Article – Media Moguls Risking It All

I have written a new article on the issues of media management and bad behavior – from harassment to lesser forms of bad behavior that causes possible injury and jeopardy to not only the victims, but also to their company’s very existence, and sometimes other collateral damage.  Naturally, I suggest that a good “morals clause” be in the contracts of all executives so the board of directors can take quick action.  I discuss recent public events and the current cases.

This article crosses the boundaries between entertainment law and labor law and, and I think you will find it an interesting read.

It is published by the Arizona State Sports and Entertainment Law Journal and here is a link to their site where you can read the entire article for free: Link to Media Moguls Risking It All

“Media Moguls Risking It All: Contract Clauses In The Entertainment Business in the Age of #MeToo,” 9 Ariz St. Sports and Ent. L.J. 1 (2019)

The Twitter Campaign

It seems like this campaign surprised everyone.  No, not the vote counts, which did indeed surprise everyone including the best forecasters, pollsters, and data crunchers.  No, I mean the Twitter campaign.

The Twitter campaign – which meant the use of Twitter by the candidates, and although one was particularly known for his tweets, they all used it as a means of directly addressing the public.  It is something that those of us in academe have been teaching for years and years – ever since the first Myspace and Friendster apps, we have been talking to our students that the “old media” would be replaced by the “new media” of the social media, and that social media is now most often called Twitter, Facebook, Instagram, etc.

We have been talking about it for 10 years.  And the new media have been growing and developing for the last ten years. So the tipping point was inevitable and now we have it.  New media can be even more effective than old media.   A media needs a certain network reach to be effective as a “mass media”.  Talking to one or two or thirty people is not enough; talking to millions makes a difference.

So what do the numbers show?  As of this day in January 2017, Twitter itself tells us that Hillary Clinton has 11.9 million followers, Bill Clinton has 6.6 Million, and Barack Obama has 80 million.  That is reach.  That is a lot of people. Those numbers, while world-wide numbers and not just the US, show a tremendous possible impact every time one of those Tweets leaves the gate.  And how about the winner of the presidential election? Donald Trump got to spend spent a fraction of the money that Hillary Clinton did on the election by using his Tweets to his 18.7 million followers. And a Twitter campaign can have many instances of contact, many tweets, on any day.  Since they are free, there is no danger of a campaign running out of money for ads.

How does that compare to the more established media? Nielsen tells us that in the last week in November, the NBC Nightly Newscast reached 7.8 million.  Donald Trump Tweets and it reaches over 18 million.  And CNN? Less than a million viewers.  MSNBC?  Same thing – less than a million viewers.  What about Fox News? A bit better at 2.4 million viewers.  Thus social media now has it all over traditional media.  And if you listen to the journalists, they are mad.  They have complained that they are not included as closely with the administration.  Why would a president waste time with people he does not need anymore?  The social media are more effective, are faster, and are more direct and unfiltered.

Some might argue that there is a need for “transparency” or “access.” Why?  Because some journalist thinks so?  Presidents have often wanted to go straight to the people. What benefit do the journalists add to a president’s life?  Once upon a time, they were the conduit to the people; now they add nothing.  Nothing added – and they ask annoying questions.  Journalists used to be the only way that politicians could communicate with the public in a “mass,” therefore the rise of the symbiotic relationship with the mass media.  Now the communication with the public is direct and a politician does not have to worry about the spin a journalist puts on the story, or even a difficult follow-up question.  Journalism is now going to have to re-invent itself.  In the age of new media, people who add little or no value to the communication are unnecessary. So what will the role of commentators be in a world of direct unfiltered communication? It is a challenge, and every day the media is adapting.  Technology disruption in media has happened many times – anyone still get a newspaper delivered to their front door anymore?

The Most Interesting Thing About the Fall Elections – 2014

The buzz all around the media is of course how the Republicans won big in the Fall (2014) elections.  Political parties ebb and flow, political fortunes rise and fall.  (Update: And the Democrats won big in 2016 and we will welcome President Biden and Vice President Kamala Harris in 2021, ending a presidency for just the reasons that follow – Americans are fed-up with the current status and want a change). So I don’t think that was the most interesting result of the Fall 2014 elections.  Perhaps some others might think it is the change in attitudes and laws regarding drugs?  Nope, not that either. Of course social morals change over time.  What then?  I think the most important and interesting thing that happened is that Americans learned how to control their employment contract.  They learned that it is possible to give themselves a raise.

The minimum wage used to be the sacrosanct possession of the federal government.  Sure a couple of high-cost states like New York might enact a bit of a larger minimum wage, but for the most part, the minimum wage was driven by the federal government, with the federal minimum wage hikes usually dragging up most states’ minimum wage.  But the federal government has been taking its time.  The last federal minimum wage hike was enacted in 2007 after being stagnant for ten years.  The last of the three increases enacted then went into effect in 2009, five years ago.  After much discussion about new concepts like a “living wage” in urban areas, fifteen of our fifty states approved minimum wage increases in 2014, either by ballot or by legislation, and a sixteenth had an advisory vote in favor of raising their minimum wage.  Sixteen of the fifty sates is 32% of the country taking action on the minimum wage in 2014.

So America has learned how to control its work contract.  Sure many people have put forth for a lot of years that increasing the minimum wage costs jobs, but the research and actual data has shown that modest increases in the minimum wage has no significant effect on employment.  So the “fear factor” around raising the minimum wage has been drained from the system.  And it appears as if Americans are tired of stagnant wages and are willing to take action.  It is easier to get a state to vote for a change than it is to get a national change, so economic activists are taking the state route.  And with the current gridlock in Washington, it appears to be the most effective route.

Could this movement grow? Why, of course.  Suppose a state decides to increase wages even more, is it OK? Yes.  Suppose they decide to make it more difficult to fire an employee, OK?  Yes, in many circumstances.  Suppose a state decides to limit pay to executives, is that OK too? A bit harder to do, but there might be ways to enact that too.  So the danger of stagnant wages is the vote.  Americans who think that wages have been too low for too long have acted through the political process.

I think that is the political lesson of 2014.  I don’t know whether I agree or disagree with the trend, I am just an observer; but since I think this was the most interesting political development of 2014, I look forward to seeing how this develops in the future.

7 Things a Start-up Business Can Learn from the Shark Tank Television Show

The ABC television show Shark Tank is a show about entrepreneurs – about budding business people looking for a hand up in developing their business.  The participants who are entrepreneurs of a start-up company, appear before a panel known as the “sharks,” composed of successful business people who have money to invest.  The sharks are well-known millionaires and at least one billionaire who receive a pitch from the participants for an investment in their business.  The hopeful participants/entrepreneurs ask for an amount of money that varies from around $30,000 to well into six figures for a “percentage of their company.” The typical ask would be for “$150,000 for 10 percent of my company,” that the participant would propose would help to move their company along by enabling them to buy a new machine for production, buy inventory, or other make another important business development.

The sharks ask questions, perhaps even grill the participants, to figure out the viability and prospects for the business.  There are five sharks, each with interesting and unique perspectives and during the pitch it is clear that the sharks also offer business advice.  The contestants hope for at least one shark to be interested and the producers seem to show perhaps more failing proposals than successful ones, but the successful proposals and the discussions between the contestants and the sharks yield a wealth business advice.

The show is now in its fifth season and I think I have watched almost all 77 episodes.  Each episode has a blend of good pitch ideas and bad ideas, of sure things and nutty participants.  After watching carefully for this long, I have taken away seven important business principals that apply in the circumstances that these start-ups are in:

You need to know your numbers cold.  If you do not know your cost-of-goods-sold, your cumulative revenue, your recent revenue trends, your profit margins on each sale, etc. you have no business being in business and the sharks will find a way of telling you that.

          If you have a physical product – intellectual property protection is key.  If you have a physical product, you are much more likely to receive an investment if there is some aspect that is protectable by a patent or copyright, etc.  Even a trade secret like a secret recipe will work.

      The sharks know a lot about manufacturing and distribution chains and they are very practical.  If your idea is not patentable or protectable, they will ask what you think will keep someone from producing the same thing cheaper.  If you cannot come up with a reason that others cannot copy your idea, you are much less likely to get an investment.

      Your markup needs to be enough to interest the investors.  If you are making something for $1 dollar, you need to be able to sell it for $3 dollars.  This is a rough generalization, but profit margins that are too small don’t interest investors.  From watching a lot of episodes, my guess is that a 3 times markup is good, but of course it does not necessarily apply in all cases.  But a lot of the products pitched retail in the under-$100 category and in that price range there needs to be wiggle room.

The markup is not all for the entrepreneur and the shark, but rather because many products also need a distributor and the distributor will need some profit too.  Note that in the real world, there are many products that don’t have 300% markups – automobiles, computers, etc. might have a markup of 25%, 40%, 60% etc.  But if you are pitching an investor, you need to know how everyone in the distribution chain can make some money.  This also means you need to be thinking about what the ultimate distribution chains might be.  It is one thing to sell a few items online where you can have small margins, but it is another to place a product in a national distribution chain where distributors will want a markup, the retailers will want a markup, and you will also want to make a profit.

      Be bold and decisive.  You have come to sell a part of your company.  Deal with the emotions of what that means and what you will be parting with before you see potential investors.  The sharks have their pens and paper pads and are making calculations.  Cold, hard calculations using the facts you give them.  They make offers based on those facts.  Whether you are getting a good deal is only a case of mathematics at this point.  Leave your emotions and attachment to your company behind, don’t vacillate or waffle.  Yes, sometimes they offer a bad deal, and sometimes the contestants negotiate for a better deal, but that is all based upon the math and the perceived value.  Whether in the shark tank or in real life, in the heat of the deal, the shark tank teaches us to rely on the facts and use the data to your advantage.

          You need to be personally “all in.”  If you are going to be taking someone else’s money, they want to know you are committed.  It often becomes apparent that an entrepreneur is doing this as a side business.  They have a day job and are not fully committed to the business.  It never takes the sharks too long to figure that out.  And those that are not fully committed are unlikely to get a deal.  Some will, especially if the shark can just buy an idea outright or figure out a way that the person pitching is no longer key to the deal, but overall, investors want to see commitment.  This is true in anything in life.  If you are going to do something, do it with excellence and true commitment.

          Sales are the most important thing you can have in business.  Investors might not care about whether you are profitable yet, but they do care about sales.  A business that seems to have a “good idea” but very few sales do not seem to get much attention from the sharks.  Even if the company is losing money overall, sales mean that people are interested in your product.  Sales are what the sharks are looking for.  That also means that it is unwise to look for much external money until you have a track record.  Sure there are some VC firms that want to invest in ideas alone and sure a person can always get their friends and relatives to invest in the early idea phase, but it becomes quite clear that it is easier to attract money if there is at lease some “smoke” whether or not there is yet some “fire.”

          Some businesses are good for an individual, but just won’t attract investors.  Certain businesses work for the individual entrepreneur but don’t really scale in a way that it makes sense for outside investors.  An entrepreneur should not be afraid of these businesses, but rather should just realize the limitations.  Businesses that relay on an individual (say personal training) or that are good but unprotectable ideas can work on a modest scale but are very difficult to roll out on a large-scale basis.

The Shark Tank can be full of lessons, and this is my reading of some things I have taken away from the show.  But of course they do a lot for drama and for the good of the show that might not be good universal business truths, but watching the show can result in some interesting perspectives.  This show is clearly more “drama” than “how-to,” but there are reports that the investments resulting from the show have exceeded $20 million, so somewhere real-life intersects with this drama.

The FCC, Net Neutrality, and a lack of jurisdiction

It has been a while since I posted, so time to catch up. One of the biggest things happeing in communications law is the recent decision of the US Court of Appeals for the DC Circuit in the case Comcast v. FCC. In this case, the court ruled that the FCC did not have jurisdiction over the Internet. While a surprise to the FCC and probably the Obama administration who tasked the FCC with Internet regulation, it is of little surprise to long-time scholars of media law.

The FCC was attempting to use its “ancillary” jurisdiction to regulated “net neutrality.” Ancillary jurisdiction has worked in the past – when cable television was a young, and at the time, inconsequential aid to a few people in rural areas who needed to receive over-the-air television. But in this case we have a mature, ubiquitous, and important media and the FCC tried to use its “ancillary” jurisdiction. The court said that the FCC exceeded its general regulatory authority when trying to apply plenary regulation to the Internet.

Congress gives authority to the FCC in the Communications Act of 1934. It is an interesting read of structural policy. For example, there is a chapter on “common carriers,” and one on “radio (and television),” and one on “cable television.” But nowhere do you find the chapter on “the Internet.” Not that the Internet needs its own chapter (but it should have one…), plenty of services are regulated under the big topics including cellphones (common carrier) and satellites (also common carrier). But even when looking for the provisions that apply to the Internet, there are few of them. So the FCC did see itself as having significant authority over the Internet, but the court saw the FCC has having what Congress has given it and not too much more.

And the importance of this case? First the FCC needs to think of another way to regulate things like net neutrality (and it is busy brainstorming right now) and second, perhaps this will encourage Congress to take up the topic of Internet regulation and jurisdiction (a new chapter in the communications act, anyone?). With clarity from Congress, the FCC could have its way with Internet regulation.

100 MB download speeds – Google and Medialawprofessor think alike

Back in 2001 I gave a presentation at a broadband conference where I made the then-bold assertion that each household would need a minimum of 100 MB of undiminishable (ie not shared) bandwidth.  I remember at this same conference that another speaker who was attached to slow DSL speeds made fun of me saying essentially that there was no need for 100MB of bandwidth to every home – he asserted that DSL( then 1.5MB tops) was as fast as anyone would need.  Well it feels good to be right and just about a decade ahead of my time.  Google is now imagining ultra high speed networks to the home and the FCC is proposing its “100 squared initiative” – 100 million homes with 100 MB of service.  In order to stay ahead of the curve, I can now foresee the need for 10GB of service to the home in the next 20 years.  It takes a lot to do a hologram even with good compression….

This is a link to my original 2001 presentation.  Towards the end you will see a couple of slides where I calculate what I think the then-foreseeable need for 100MB might be: https://medialawprofessor.files.wordpress.com/2010/02/broadband-presentation-morris1.ppt

Social Media? Still a small deal

And so the Super Bowl is over, and more importantly the commercials of the Super Bowl.  What do people watch? Still television has the most impact.  Yes, the ratings of the networks are going down.  Yes there is increasing fractionalization of the audience.  But if you want to launch or promote a product of general interest (car, hamburger/food, beer, stock brokerage), the best place to advertise is still in the mass media.  That is not to say the social media is not important, it is, but it might take months for a million views of even the most popular shared viral video on You Tube, and NBC’s Olympics is reaching 10 million, American Idol reaches 19 million, and the Super Bowl reached more than 50 million.

Bye Bye Coco

And so last night was the last Conan O’Brien Tonight Show.  I have been watching this week – it was Conan’s best week ever.  He let loose and did real comedy.  His guests were free-wheeling and able to say almost anything.  Conan packed his show full of comedy.  And what happened? His ratings went up.  To the highest levels ever.  Sure the news gets people to tune in, but programming gets them to stay.  So in his final week, he showed the network what they will miss, and it was, unfortunately, what he should have been doing all along.  But the show was good.  Conan had still not developed into the top-flight host that Jay and David are – Conan STILL interrupted his guests (here’s a hint Conan: When you have Tom Hanks on, he is funnier than you are and your audience wants to hear him – just let Tom Hanks talk! Don’t interrupt him!) Even with Conan-interruptus, it was one of the best segments all week.

So is putting Jay back on the Tonight Show the right thing for NBC?  This is just a long-time television observer’s opinion, but Jay has done damage to himself.  Can he win the late-night ratings? Maybe.  But it won’t be like it used to be with Fortress Jay dominating late-night.  People have had a chance to tune around and see what else is available and the young, hip comedians are creative and interesting.  Jimmy Fallon is showing his range (he can even sing a bit) as an entertainer. Craig Ferguson (a bit older, but still new to the scene) is showing that he is a terrific interviewer. Chelsea Handler is a stealth but powerful force.  Jay now needs to look over his shoulder.  As of today, Jay is the definition of old-school.

Good luck to Conan on his future career moves.  Good luck to Jay.  Now that the battle is over, it is time for this viewer to surf the channels and find something interesting to watch in late night.

Conan and the end of the road at NBC

It seems as if Conan has made his “personal choice” (see my blog entry below) and will not host a 12:05AM Tonight Show.  And all there is left for him to do is work out an exit strategy.  One blog reports that Conan was owed $60 million if he could not host the Tonight Show.  He will probably settle for much less and he will need to get a release from the network for a reasonable time for him to start a competing show.  There is no doubt that Conan has competing offers.  Other sources also report that Conan is working out some help for his staffers who moved to LA with him just a few months ago.  In this economy, they do need some protection from becoming part of the huge amount of collateral damage.  Imagine trying to sell a house you bought 7 months ago or getting a new job as a comedy-show staffer in this environment?  Jay already has a staff and a studio.

So what went wrong?  This observer believes that both Jay and Conan are responsible for their own ratings failures.  Let’s start with Jay.  Jay tried to take his version of the “Tonight Show” and move it to primetime with a little more flash.  Who is he kidding?  Any student of television (except perhaps the brass of NBC?) knows that the homes using television are much higher in primetime and that the audience is different.  Carrying over the same show is a recipe for failure.  While some of the new bits were charming (the Dan Band) more often than not the new segments were pace killers.  The “earn your plug” segment stopped the show in its tracks and were not amusing, they were almost like watching an old Gong Show segment, except the poor celebrity clearly was not having as much fun as a Gong Show contestant.  And the electric car segment was cute a time or two, but it was also so clearly a show-stopper that when Arnold Schwartzenegger was on, they just had him blow up the car al la the Terminator.  This observer thinks that the old Johnny Carson show would have appealed to a broader audience and had higher ratings in primetime.  Johnny Carson had something for everyone; he was almost a variety show  – depending on the night, he did some monologue, brought out a guest, brought out an animal act, brought out a comedian (notice Jay rarely had on a “competing comedian telling jokes), and ended with a big musical act.  Even if that is not the tastes of the audience in 2010, it is an example of a much broader-appealing show that if reconceived in 2010 might be broad enough to attract more of the pre-news audience.

And what about Conan’s Tonight Show? Same exact issue, he tried to move from a place where he had an audience that loved him to a new place without changing the show.  Dick Ebersol, a legend himself in late night (Saturday Night Live) stated in an inerview in the New York Times that he tried to get Conan to broaden his show’s appeal ( http://www.nytimes.com/2010/01/15/business/media/15conan.html).  although Mr. Ebersol defends Jay, my opinion is that Jay committed the same sin.  The ratings of both shows tell the same story.  Audience appeal is measurable by the ratings every day in timeparts of 15 minutes or less (so a show can tell if a single segment isn’t working!) and neither show could find the right mix to bring in the audience.

And what were the NBC brass thinking? The last time there was a host change on the Tonight Show (Carson to Leno) it took over a year before it found its audience with the famous Hugh Grant interview that finally pulled it ahead of Letterman in the ratings.  From this perch in middle-America, it appears as if they did not have plans for how to make the long-haul to success.  NBC took years to build up its primetime success in the 1980’s and 1990’s and years to lose it; if there is any organization that should, in theory, understand long-term audience development, it should be ?NBC.

What next for Conan? Both Jay Leno and David Letterman are absolute masters of the late-night format.  They are both are superb comedians.  If Conan tries to compete directly with a re-engineered Jay-vs-David late-night landscape, it will be a difficult road for him.  Just my opinion.

Comcast v. FCC, net neutrality, and homework

In Comcast v FCC, the FCC is attempting to sanction Comcast for interfering with internet services – and interfering with internet services is against the principles of “net neutrality.”  However, Comcast is defending on what this author believes is a very effective ground – that the FCC does not have authority to regulate net neutrality.

The FCC is given its authority by the Communications Act of 1934, as amended many, may times over the years including by the Telecommunications Act of 1996.  The problem for the FCC in this case is that the Communications Act has not been amended to empower the FCC to address net neutrality.  The FCC normally needs explicit jurisdiction, granted by Congress and the President, in order to regulate communication subjects.

Of course there are some exceptions.  For example, when the subject is “reasonably ancillary” to a subject that the FCC has explicit authority over, the courts have held that regulation is OK.  Even so, the FCC can go too far in that regulation.  The reasonably ancillary doctrine was applied to cable television cases.  US v. Southwestern Cable 392 US 197 (1968).  However, the FCC went too far in its “ancillary regulation,” and the courts rejected additional regulation in FCC v. Midwest Video. The jurisdiction of the FCC over cable television was eventually cleared up in the Cable Communications Policy Act of 1984.

So which will it be in this case? The appeals court has yet to rule.  So this is an instance where FCC regulation is not certain.  In cases where the FCC overreaches, or where the FCC does not “do its homework,” the courts are not afraid to overturn the FCC’s rules.

Conan, contracts, and character

Conan has taken an interesting approach to the late-night fiasco – refusing to be on a “Tonight Show” that airs after midnight and follows a half-hour of a Jay Leno Show.  In late-night, the Tonight Show has always been the gold standard.  It was the show all comedians aspired to.  It was a show that during the Carson years launched or helped most of the new comics get a start (including Leno and Letterman).  The venerable show has been on since 1954 and has only had five permanent long-term hosts.  To give that up, and the money that comes with it, is an amazing position.  What surprises does Conan’s contract hold? Perhaps he wants to be released from his non-compete clause so he can go to Fox? The last thing late-night would need is a three-way race between Jay, David, and Conan.  Conan says that the show itself is too important to destroy.  Is that character, or something else?  More developing.

Letterman is having the most fun with the situation.  The last two nights he has had a lot of jokes and commentary on the situation.  Of course Letterman is no stranger to late-night drama.

Leno’s show has to move.  It si costing the affiliates too much money.  But more importantly, it is killing the Owned and Operated stations.  That directly affects NBC’s bottom line.  It is one thing to hurt the affiliate’s bottom lines, it is another to be hurting your own, especially as GE is trying to sell NBC off to Comcast and would like to get a decent dollar for the Network and all that goes with it.

Will the Jay Leno Show survive – part 2

As discussed in a previous post (Dec 22) the Jay Leno show has been at risk due to low ratings.  Yesterday Jay made light of the current cancellation rumors.  Video clip here: http://www.thejaylenoshow.com/video/clips/leno-talks-cancellation/1191249  There are lots of business reasons for the potential re-working of late-night television.  Reports seem to indicate that Jay would go back to late-night where he is a dominant figure and has been for 17 years.  Why the problems with low ratings?  NBC knew that the Jay Leno show would not attract as many viewers as its prime-time offerings.  The problems are that the low ratings are destroying affiliate and O&O stations’ new ratings as well as having a deleterious “halo effect” on prime-time.  One could say that everyone is losing money on the deal.

Taking one money-losing portion at a time: First the local affiliates and their newscasts.  A broadcast network actually owns the stations that cover a large portion of the country, up to approximately 35%, varying slightly by network and NBC’s percentage is 27% owned-and-operated coverage.  That leaves approximately 73% of the country that is covered by affiliate stations and the cable systems that pick them up. the local stations depend on the network for a good lead-in to their news to get good ratings.  The problem for the networks is that people tend to “fall in love” with their local newscasters and have a very high loyalty to a local news team.  If NBC is effectively chasing away viewers to other stations, the viewers have a chance to “fall in love” with another news team.  The effects would take a long time, perhaps years to undo.  So the affiliates want the problem fixed and fixed fast.

The O & O stations have a similar problem and the O & O stations deliver a lot of profit to the networks.  But if the network was making money otherwise, it could take the decrease in revenue from its O & O newscasts.  It sometimes happens during special events (the Olympics, etc.) that the network might take a brief hit to the O & O newscasts for the greater good of the network.  But a long-term hit might take years for the O & O stations to undo, the same as for the affiliates.  News is a very competitive business.  The other stations will be doing all they can to attract and keep the disaffected network viewers.

Most important, however, to the network is the developing “halo effect” – all of NBC’s primetime ratings are falling.  Is it due to the Leno experiment? Or partially due to the Leno experiment? It is hard to tell but ratings for NBC have clearly fallen to very low numbers.  NBC’s primetime was not doing well before Leno (http://www.huffingtonpost.com/2009/05/28/nbc-primetime-ratings-hit_n_208518.html) and had already hit lows.  So it is difficult to sort out the reason for the Fall decline, but various outlets are reporting that NBC has as many as 18 pilots in the pipeline for next year – a possible sign that they were preparing to bail on the Leno experiment a while ago. (http://www.forbes.com/feeds/ap/2010/01/08/entertainment-broadcasting-amp-entertainment-us-tv-jay-leno_7261171.html).

Back when I worked at NBC, the two big revenue generators for the network were primetime and latenight. Primetime ratings are in the tank and Conan has not kept the same latenight ratings that Leno had when he ran the “Tonight Show.”  My guess is that NBC is hurting and changes are coming very soon.

Net Neutrality – Why is it important to me?

The Federal Communications Commission (FCC) has an open proceeding on net neutrality.  What is net neutrality and what does it mean to me?

Net neutrality is a nominative term for equal access to all of the services that the internet has to offer.  In contrast to net neutrality is a variety of activities that restrict the end-user from transmission of the full range of internet communications.  For example, suppose that you want to use a VOIP service that is much cheaper than what your internet service provider provides.  Say you can get Skype for $3.95 a month but your internet service provider – the phone company that provides your DSL or your cable company that provides your high-speed internet service – has a competing offering of VOIP telephone for $12.95 a month.  Your internet service provider might consider the competing service as undesirable and either block it entirely or at least slow down the access of that service.  In that case your internet service provider is not providing neutral, equal access to the internet.

There are plenty of legitimate reasons to block some services on the internet.  For example, certain services are obsolete and insecure, so some ISPs block them entirely.  Also, some services, especially database services, are often deemed premium services and the ISP is willing to let those services operate for a slightly higher monthly fee.  On the other hand, however, are actions by ISPs such as blocking services like competing VOIP providers – those actions seem to be an uncompetitive practice.  The most difficult questions come with services used for both legitimate purposes as well as purposes that may lead to illegitimate uses such as copyright infringement.  Some of the P-to-P protocols and services might be considered in this category.  The ISP will claim that the P-toP services consume too much bandwidth.  The end user will claim that they are entitled to be able to use the P-toP service.

The macro business issues are difficult.  The ISPs have invested millions of dollars into their physical plants and the labor it takes to run them.  shouldn’t they be able to make money off of their investment in appropriate ways?  The end users will assert that they are paying the monthly fee, shouldn’t they be entitled to use the internet in any way the wish?

You are an end user.  What do you think? Under what circumstances should ISPs be able to block services on the internet? For security reasons? For business reasons? Should end users have complete and unfettered access to all services on the internet?  The FCC has an open proceeding.  They will be holding public hearings on the issues, they will be posting information and notices, and they will be accepting comments from the public.

Advertisements for television networks in movie theatres

In an interesting twist on traditional media norms, the advertisements in te movie theatre that I went to over break were for television and cable networks.  Of course, the tradition was that advertising from television and cable networks drove audience into theatres.  Now it appears as if the audience is being driven back to the networks from whence it came.  Of course in the age of Tivos and DVRs, it makes some sense that DVR-able neworks is looking for a captive audience with no fast-forward button.

Will the Jay Leno show survive?

This week’s Broadcast and Cable magazine had an article on The Jay Leno Show.  B & C reports that some affiliates are disatisfied with the ratings.  The Jay Leno show is running approximately half of the ratings of the previous shows.  This is a major problem because the Jay Leno Show airs five nights a week.  It is not the same as a primetime show failing, this means a good portion of all of primetime is failing.  Networks usually make most of their money from primetime programs.  More importantly for the distribution realpolitik though is the satisfaction (or lack thereof) of the affiliates who count on primetime programs to provide good lead-in ratings to their newscasts.

Does a network need affiliates? Many would argue that in today’s world of technology, networks could do without affiliates.  On the other hand, affiliates still deliver virtually all of the networks’ viewers.  so the balance is delicate.  The network is arguing that Jay Leno is a 52-week strategy, where Jay Leno will outperform the other networks once those shows go into reruns and Jay Leno still has original and fresh programs.  Which side will win?